Wednesday, July 30, 2014Last Update: 10:28 AM PT

Class Decries Scam on Small Businesses

CHICAGO (CN) - A debt collector defrauds mom and pop businesses, leasing them a defective credit card processing machine, then suing to collect on a forged four-year lease, business owners claim in a class action. Lead plaintiffs Ronald Blankenship and Gary Brassfield sued Pushpin Holdings, Lease Finance Group, and Jay Cohen, who owns both companies, in Cook County Court. "This class action is brought to stop a scam being operated by Pushpin, Lease Finance and Cohen," the lawsuit states. "The scam is to threaten to file, and to actually file, hundreds of bogus small claims suits in the Circuit Court of Cook County, Illinois. The suits are frivolous and all subject to dismissal with prejudice. They are frivolous because their filing violates mandatory arbitration clauses in the subject lease agreements. In addition, the suits are time barred." Blankenship is a 70-year-old sole proprietor of a shoe repair store in Bessemer, Ala. Brassfield operates an auto lube shop in Arkansas. Both men say they were solicited with high-pressure sales tactics to lease a credit card processing machine, and agreed to lease the machine for one year. They say the machines either did not work properly, or broke, and they returned them. Then the defendants sued them in small claims court, claiming they had violated a 4-year lease agreement. The plaintiffs say they "did not even sign the lease agreements on which they are being sued. Instead, their signatures were forged on the documents." In 2013, Lease Finance settled criminal charges brought by the state of New York accusing it of withdrawing $3.6 million from more than 100,000 customers' bank accounts without authorization, according to the complaint. It agreed to repay the money, the plaintiffs say, citing a press release from the New York Attorney General's Office. But "instead of learning their lesson from the New York settlement, the class action defendants simply changed the nature of the scam that they operate. Instead of wrongfully taking money from the bank accounts of customers on expired leases, they now obtain default judgments on bogus collection suits filed in Cook County and then extort money out of customers through unlawful collection demands and threats," the plaintiffs say. In the first two weeks of July this year, the defendants filed more than 150 new collection suits in Cook County, according to the complaint. "The collection suits are brought in clear violation of mandatory arbitration clauses which require that all disputes must be submitted to arbitration. The arbitration clauses say that all disputes arising out of the leases shall be submitted to arbitration. Filing hundreds of collection suits is a willful breach of contract," the lawsuit states. The plaintiffs say the collection letters and notices are rife with false or misleading information, and that the complaints purport to be notarized by Luisa Tatbak, whose name is not on a list of registered notary publics. They seek class certification and damages for fraud and violation of the Illinois Collection Agency Act. They are represented by Howard Prossnitz.